JITTERS

Some businessmen are apprehensive over FLI’s cancellation of its SRP contract with  Cebu City; some projects now on hold

Bad business and bad for business.

This was how some businesses perceive the cancellation by Filinvest Land, Inc. (FLI) of its contract with the Cebu City government for the purchase of a 19.2-hectare lot at the South Road Properties (SRP) entered into during the incumbency of then mayor Michael Rama.

The Rama administration sold a total of 45.2 hectares of the SRP. The SM-Ayala consortium purchased 26 hectares while FLI bought 19.2 hectares.
Incumbent Mayor Tomas Osmeña has constantly questioned these contracts, describing them as anomalous.

Last Monday, FLI announced during a press conference at the mayor’s office that it wanted to rescind its contract with the city government covering the 19.2 hectare lot.

It said there were many covenants and obligations under the contract which the city has failed to comply with.

FLI Vice President for VisMin, Tristan Las Marias, however, admitted that the move was also to improve the relationship between the city and FLI and ensure the city’s cooperation and support for their other projects in Cebu City.

The mayor welcomed FLI’s announcement, saying it gave a future for the SRP.

Osmeña, on the other hand, said he had been receiving feelers from third parties regarding a similar rescission of contract from the SM-Ayala consortium.

“Daghang feelers from third parties pero dili ko mo-tuo ana (There are many feelers from third parties but I do not believe them),” Osmeña said in an interview with TV Patrol Cebu yesterday.

“We are fighting three giants here. We will take it one step at a time,” he added.

Second thoughts

Presidential Assistant for the Visayas Michael Dino said businessmen are now having second thoughts on investing in Cebu because of these recent developments at the South Road Properties (SRP).

He said seven companies involved in tourism, real estate, and retail have put on hold plans to set up shop in the city.

The official, however, refused to divulge which businesses these are.

The SRP is a 300-hectare prime property development project on a reclaimed land located a few meters off the coast of Cebu City’s central business district.

When the project started, it was envisioned to be one of the premier economic zones in Cebu.

It is currently home to several big projects such as SM Seaside City Cebu as well as FLI’s 40-hectare City di Mare and Il Corso.

Cebu Chamber of Commerce and Industry (CCCI) president Melanie Ng said if unresolved amicably, the conflict between locators at the SRP and the Cebu City government will affect the attractiveness of Cebu as an investment destination.

She said the business organization hopes transaction issues at the SRP will be settled soon.

“CCCI continues it’s relentless efforts to promote business and attract more investments to Cebu,” she said in a text message.

But for businesses to thrive, she said, strong collaboration between business, the local government, and various government agencies is needed.

Growth

Cebu has been growing at an exponentially fast rate, thanks to the construction of several establishments such as the Cebu Business Park and Cebu IT Park.

Both areas are host to regional headquarters for various companies in the banking, finance, information technology, and tourism sectors.

With the city’s proximity to many other islands, beaches, hotels and resorts, diving locations and heritage sites, high domestic and foreign tourist arrivals have fueled the local tourism industry.

Given its strategic geographic location, easy accessibility by air, land and sea travel, Cebu City has become the tourism gateway to central and southern Philippines.

Real estate is also among the fastest growing sectors in Cebu, with more housing projects being developed in the city due to the locality’s strong economic indicators and high levels of investor confidence.

The city is also a major hub for the business process outsourcing (BPO) industry of the Philippines, considered to be one of the country’s major economic drivers.

In 2016, Cebu ranked 7th worldwide in the “Top 100 BPO Destinations Report” by global advisory firm, Tholons.

The BPO industry in Cebu presently employs 150,000 workers with plans to hire more in the next few years.

‘Bad business’

Cebu City Councilor Joel Garganera said the scrapping of the purchase agreement by FLI with the city government is “bad business” for Cebu and could become a precedent for some companies who have contracts with the city government.

“If that’s the case, people will no longer treat us seriously. If there is a contract of sale, there’s a meeting of minds. In other words, they can’t just rescind it. They are answerable to the people,” Garganera said.

If FLI’s reason for canceling the contract of sale is the failure of the government to comply with the obligations set forth in the contract, then they should have filed a case for breach of contract, he said.

Garganera reiterated that Osmeña still needs the approval of the city council before the contract can be rescinded.

But according to Osmeña, whether or not he gets the approval from the council, he is confident that the cancellation of the purchase would push through.

“Right now, we are in the process of consolidating our legal position, developing all our legal options and we think, this may take about 30 days,” the mayor said.

He said with the cancellation of the contract and the return of the property to the city, his plan to develop Pond A, a 60-hectare unreclaimed area behind the 19.2 hectare property which FLI bought, will become more marketable and bring more money for the city.

“The opening to Pond A is the most vital part of it. I prepared plans for the property 10 years ago. It is going to be the best part of the SRP, Pond A and the area that Filinvest bought. I am very happy that we will get it back. Pond A will be marketable by extending it to the road,” Osmeña said.

“We are going to create a river from Pond A up to Kawit Island so Pond A will no longer be inside. It will be beside the road. It is just going to be a river, but near the road, it will flare out. We have to fill it up, for the title,” he added.

TAGS: businessmen, Cebu, Cebu City, Filinvest, investment, investors, Mayor Osmeña, South Road Properties, SRP, Tomas Osmeña